Article Highlights

  • French GDP (Prelim.) m/m: 0.3% vs. 0.1% forecast, -0.1% previous
  • U.K. Construction Output m/m: 1.8% vs. 4.0% forecast, -3.0% previous
  • European GDP (1st est.) q/q: 0.2% vs. 0.1% forecast/previous
  • European HICP y/y inline with 0.4% forecast/previous; Core y/y inline with 0.7% forecast/previous
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The Japanese yen sell off continues while the euro and pound sees choppiness thanks to fresh GDP data from Europe and construction data from the U.K.

First, on the economic data front, it was one of those rare days where we saw positive data from the euro zone, most notably early GDP estimates. France (which has been a laggard) showed a big jump from the previous read, and Germany (Europe’s largest and most influential economy) also came in at 0.1%, above the previous read of -0.1%.

This provided a short boost of buying activity ahead of the London open, which was limited as choppy price action is the name of the game. After dipping to 1.2425 during the Asia session, the positive news pushed EUR/USD as high as 1.2470 before  sellers took back control once again. The pair is currently trading around 1.2435, down 38 pips (-0.31%) on the session.

The British pound continues to find no love this week (GBP/USD down about 300 pips or -1.89% from its 1.5943 high this week) with forex sellers automatically hitting the sell button right from the London open. It didn’t help that U.K. construction orders disappointed, adding to the predominant sentiment driver that a rate hike in the U.K. will be pushed back further.

And finally, the Japanese yen sell off resumes after comments from the IMF on Japanese sales tax policy during the Asia session paints a bearish picture for Japan’s fiscal deficit. Japanese yen pairs continue their tear higher during European trade, with momentum on their side at the moment:

USD/JPY is up 78 pips (+0.68%) to 116.53, EUR/JPY is up 48 pips (+0.33%) to 144.90, and CAD/JPY is up 55 pips (+0.55%) to 102.37

The  forex calendar for the Friday afternoon London/morning U.S. session is pretty heavy with U.S. data and a Canadian data point to round out the week.

At 1:30 pm GMT, we’ll get Canadian manufacturing sales (1% forecast vs. -3.0% previous), U.S. import price index (-1.5% forecast vs. -0.5% previous) and U.S. retail sales data (headline 0.2% forecast vs. -0.3% previous).  The U.S. retail sales data will most likely be the short-term forex market mover as it is a big component of the U.S. consumer driven economy.

To round out the economic calendar for the week, we’ll see University of Michigan sentiment survey data (87.5 forecast vs. 86.9 previous) at 2:55 pm GMT and U.S. business inventories (0.2% forecast/previous)  at 3:00 pm GMT. Both are mid-tier events so don’t expect currency moves unless we get a big surprise from either number. Stay frosty!

See also:

Asia Session Recap

U.S. Session Recap

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